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Several times each week, well-groomed young men and women parade by my faculty office with a steely-eyed mien as premeditated as their business attire. They are in search of the university career centre, which is up a narrow staircase seemingly invisible to those looking too hard. "Can I help you?" I've learned to offer. "Please!" they practically whimper, their carefully planned confidence evaporating into thin air. "I'm lost."

"Lost" is a good word for the graduate of today. Even at a prestigious institution such as Duke University, where the job placement rate is well above the norm, students feel unprepared for the workplace that awaits them. No wonder. Every survey of employers underscores the fact that higher education no longer prepares students for the changing demands of the contemporary workplace.

Whether the study is conducted by the CBI in the UK or by commercial for-profit educational providers drumming up business for their remedial post-baccalaureate job-training services, everyone seems to acknowledge that today's students are good test-takers but lack the workplace essentials necessary for the 21st century. These include people skills (especially in diverse global contexts), communication skills, collaborative skills, analytical skills, networking skills, an ability to synthesise information across a wide range of evidence, and even the most elementary skills, such as how to write a great job application letter and curriculum vitae or represent their character and talent at a job interview. No wonder they face the career centre with such trepidation.

A university degree still brings material rewards. In the US, a graduate today earns 65 per cent more than someone with a high school diploma; a master's degree offers a premium of 105 per cent. In the UK, the government claims that graduates can expect to better the lifetime net earnings of non-graduates by at least ?100,000.

But how much longer will this be the case if graduates need the most basic retraining before they are fit for the workplace? Tuition fees keep rising; graduates leave saddled with debt; the job market is terrible; and students aren't being prepared for those jobs that do exist. How did it come to this? And what can we do about it?

To answer those questions, we need to reflect on how higher education came to be what it is today. We all think we know what work is. We all think we know what education is. What we really know are the institutions of work and education developed over the past 150 years. People had to be taught the division of labour in all its manifestations, and public education was designed for that purpose. Virtually all the features that have come to be synonymous with the institutions of education and the workplace have been carefully developed to support and enhance the ideals and methods of the industrial workplace.

Before industrialisation, no school bell rang to send everyone into the classroom at the same time; we did not divide the day into set subjects, put every student in a row, sort every class by age (not maturity or preparation). When we look at our own children, we see vast ranges in maturity and independence, as well as a range of abilities and interests. But the industrial world of work doesn't want human individuality. It wants workers who know their specialised task and perform it routinely and like clockwork. Especially after Frederick Winslow Taylor's famous time and motion studies of the late 19th and early 20th century, efficiency was king and the goal of education was, implicitly and explicitly, to train a future labour force for mass production. The keywords of 20th-century education are efficiency, uniformity, timeliness, standards and standardisation.

Industrialism's emphasis on standardisation pertains whether you are a worker on the line, the foreman running the line, the manager supervising the plant, the designer creating the blueprint for the object being produced, the salesperson peddling the product, or any one of those white-collar workers in the office building who measure outputs, supervise sales, distribute products, manage operations, and then provide the corroborating statistics in an annual report on the company's bottom line. Whether in the factory or in corporate HQ, industrial-age business is arranged hierarchically, with someone in charge.

For more than 100 years, training a student for the world of work has meant instilling the lesson of hierarchy and a vertical management system that depends on specialisation, expertise and devising the right metrics for determining success. Human resources departments work to systematise variant human outcomes within complex organisations. From the late 19th century onwards, the elite university system that prevailed since medieval times has been reorganised to meet that need. That is why we have (this is a condensed list): faculties, departments, disciplines, different degrees, divisions (natural sciences from human sciences), professional schools, business schools, degree requirements, electives, statistics, spreadsheets, grades, IQ tests, multiple-choice tests and, of course, rankings of each student within a university and rankings of each university against the others. The history of 20th-century higher education has been the history of assessing individual achievement, measuring, certifying and quantifying outcomes and outputs.

No employer today counts such things as the "basics". Yet that is the form of education we have handed to those nervous students looking for the stairway to the career centre. According to the US Bureau of Labor Statistics, the graduate of today will change career four to six times in a lifetime. By one estimate, 65 per cent of the jobs that will be available upon college graduation for students now entering high school (that's eight years from now) do not yet exist. Consider the new interdisciplinary field of genetic counselling, which combines biological science with social work and ethics - it was ranked as one of the "top 10" career choices of 2010 because it offered far more openings than could be filled by qualified applicants.

We continue to prepare students as if their career path were linear, definite, specialised and predictable. We are making them experts in obsolescence. We are doing a good job of training them for the 20th century.

Just as steam power and the assembly line changed the workplace at the beginning of the 20th century, two inventions have changed the workplace in the 21st: the internet and the World Wide Web. The reason Thomas Friedman's 2005 book The World Is Flat: A Brief History of the Twenty-First Century made such a huge impact is that he does a brilliant job of explaining clearly and succinctly how the end-to-end principle of the internet and the web have reorganised global life in the 21st century not as a vertical hierarchy but as a horizontal plane. That doesn't mean everything and everyone is equal. Hardly. What it means is that the assembly line and standardisation and all those metrics of the early 20th century now describe a principle of communication and productivity that is fast being outmoded and disappearing.

With the internet and the web, work and information flow in an almost opposite manner of the linear assembly line or "line" vertical management forms. No foreman or manager or CEO is at the controls decreeing which information will go where. All information is bundled at the end point (my computer or, at most, my server), broadcast by me out on to the web, and then capable of being captured by any other end point (your computer) without the intervention or involvement of a broadcaster, publisher, editor, teacher, manager, company, foreman or CEO.

The free flow of information on the internet and the web has an enormous impact on how we work, communicate and interact, how we gather as citizens and global observers, how we arrange and disrupt organisations, on levels small or large. We may or may not like it, but workflow in the digital age is a constant unsorted bombardment that defies old divisions of labour. We receive urgent memos at a rate never imagined before and from anyone in the corporation, whether they are on the next floor or at the partner office in Bangalore. And we receive those on the same computer that delivers us banana bread recipes from Aunt Bessie and "lolcats". We may still work in a cubicle (although even that is changing) but all the world's diversions exist at our fingertips, one mouse click away.

Think about the skills this environment requires. This end-to-end principle requires new sorting and attentional skills, collaborative skills, judgement and logical skills, synthesising and analytical abilities, critical and creative skills, qualitative and quantitative skills, all together, with few lines between them. These are sometimes called "21st-century literacies", a range of new interpersonal, synthesising, organising and communication skills that companies insist today's graduates lack.

It was about 15 years after Taylor's studies of workplace efficiency that educators began to reshape the university into disciplines, departments and so forth. We are right on time for a major reorganisation of the contemporary university.

In 2002, I sat with my colleague David Theo Goldberg, director of the University of California Humanities Research Institute, at a meeting of administrators who were talking about "resisting" the encroachments of technology into the university. We heard a lot of what might be called the "internet is driving us to distraction and making us dumber" logic.

We stepped away from all the ineffectual handwringing (the internet isn't going to go away) and began to list the colleagues we knew who were already considering how higher education might be transformed to take maximum advantage of these changes and how to prepare students for them. Within a year, a group of about 15 of us - prominent educators from every discipline - formed a virtual network with an unwieldy acronym, the Humanities, Arts, Science, and Technology Advanced Collaboratory (Hastac). Don't ask - everyone just says "haystack".

Dedicated to the new ways of learning and doing research that are required for the 21st-century workplace, Hastac now has about 5,400 active registrants, and there are 200 members of the Hastac Scholars Fellowship programme (see box, below), so there is definitely interest in educational transformation, and it's growing. What is slower is institutional change, but that is starting to happen, too.

In December 2009, David F. Bell, senior associate dean of the graduate school at Duke University, asked me and others at Duke to mobilise the network to outline a next-generation master's degree. We have held local and national forums, online and in person, and have assembled some 300 comments - and all this input has informed a degree programme that is now being vetted by various university approval committees. The proposed programme should be open for business in 2012 or 2013. It is a prototype of a new hybrid degree that, we hope, can inspire other programmes everywhere.

What we have come up with is hardly perfect: in the real world of real programmes, nothing ever is. To our knowledge, it's the first master's at a research university to move across human, social and natural sciences; to combine qualitative and quantitative learning; to merge the research master's degree with the professional master's; to require both deep theoretical and historical thinking and practical, business, applied management experience and training, and new forms of collaborative online writing and presentation. Our tentative title is the "master's in knowledge networks" (see box below).

At its heart is a series of core theoretical courses designed to help students comprehend the magnitude, extent and importance of historical change, especially in the novel ways we communicate, interact, organise social life and work together because of today's global, distributed information infrastructure. These are neither utopian nor dystopian, but case-based peer-led courses designed to give heft and perspective to the moment's hyperbolic assessments of what saves or dooms us. There is also a required core course in data extraction and assessment, one of the most powerful interpretive tools of the 21st century.

The final piece is a curriculum vitae and portfolio workshop where students learn to inventory their lives, skills and accomplishments and present those to prospective employers.

We don't anticipate that having this degree - or any degree, for that matter - will mean that graduates can solve all potential crises, but having some grounding in history and in this historical moment can help them think about problems (and explore potential solutions) before they become crises. That includes graduates' own crisis of facing a workplace unprepared by the education for which they have paid so dearly.

We are 15 years into the commercialisation of the internet, and we are seeing its impact on every aspect of our lives: from the 24-hour interconnected business day in our personal work lives, to such major changes as the demise of the recording industry and the collapse of newspapers, to the growth of computer games as the most popular new form of entertainment or the spread of revolution through Twitter and Facebook.

Our educational systems, so far, look as if the internet hasn't been invented yet. Scratch most conventional academic departments and you see little hint of restructured courses, let alone restructured thinking.

The students who find themselves lost on the way to the career centre are the canaries in the coal mine of higher education. Today's typical college graduates were born around 1989. They grew up playing computer games, gaining education online. Most still remember the first time the internet came into their lives and can tell stories about that event, but for a not-far-off class of graduates that won't be the case.

My students live an extracurricular digital life that is as rich, varied and ever-changing as is the world of work that lies ahead of them. Sadly, in between their digital personal lives and the digital work life ahead stands the institution of education as stern and unyielding as Taylor with his stopwatch, clocking how long it takes to move a wheelbarrow of bricks from Point A to Point B. This has to change. The time is right, now, to rethink education for the world of work of the present, not for the past. Let's get started.